2020 (3) TMI 75 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - acquittal of charge under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumption - HELD THAT - As per Section 139 of the Negotiable Instruments Act,1881, It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. Presumption is rebuttal but respondent did not enter into witness box to rebut the same nor it is rebutted by evidence of appellant side. From the statement of the appellant, respondent borrowed a sum of ₹ 25,000/- from him due to personal relation, therefore, it is not a case under Money Lenders Act, 1934. Again, the amount in question is not within purview of the Income Tax Act, 1961. Any infringement of provision of Income Tax Act, 1961 is matter between revenue and assessee, but same is not relevant because it is proved that money was borrowed by the respondent. Corroborative piece of evidence is not a rule of law, but it is a rule of prudence and presumption under Section 139 of the Act, 1881 is rule of law and presumption has to be drawn by the court as per Section 139 of the Act, 1881. When presumption is not rebutted, charge under Section 138 of the Act, 1881 is established. On an overall assessment, it can be said that the finding of the trial Court is against weight of the evidence and same is not legal because it is contrary to the provisions of the Act, 1881. In view of the evidence of both sides, argument advanced on behalf of the respondent is not acceptable and the act of the respondent falls within mischief of Section 138 of the Act, 1881 - Acquittal of the respondent set aside. Respondent is convicted under Section 138 of the Negotiable Instruments Act, 1881 - appeal allowed.

Summary

Issues:
Acquittal appeal against judgment under Section 138 of the Negotiable Instruments Act, 1881.

Analysis:
The appellant alleged that the respondent borrowed ?25,000 and issued a cheque which bounced due to insufficient funds. The trial court acquitted the respondent based on provisions of Money Lenders Act, 1934 and Income Tax Act, 1961, instead of the Negotiable Instruments Act, 1881. The appellant argued that evidence proved the debt, issuance of the cheque, and dishonor due to insufficient funds. The respondent claimed that the debt was not proven. The court examined whether the respondent borrowed the amount, issued the cheque, and failed to pay after notice. The appellant's evidence, supported by documents, established the debt and dishonored cheque.

The court referred to Section 139 of the Negotiable Instruments Act, 1881, which presumes that a cheque is issued for discharge of debt unless proven otherwise. The respondent did not rebut this presumption. The trial court's finding on cash advance and Money Lenders Act was deemed incorrect as the respondent did not deny borrowing the money. The court held that the presumption under Section 139 stands when not rebutted. The trial court's decision was against the weight of evidence and the law. The respondent was convicted under Section 138, with a fine of ?38,000 and 6% interest per annum on the principal amount.

In conclusion, the appeal was allowed, acquittal set aside, and the respondent convicted under Section 138. The respondent was ordered to pay the fine and interest, with non-payment leading to further interest. The court clarified that jail detention does not discharge the liability, emphasizing payment as the only satisfaction. The amount was to be paid within fifteen days, with interest accruing if not paid promptly.